Dreams of Floating Decadence
When it comes to superyachting, it's definitely pay to play. And then pay some more. No, more. Keep going …
If you’ve ever Duffy-d by the Balboa Bay Club’s A Dock and coveted the 100-foot-plus superyachts berthed there, picturing yourself spooning beluga sturgeon caviar and sipping Dom Perignon as you lounge on a gleaming aft deck and watch silly little Duffys motor past, well, frankly…
You’re thinking small.
Because while, technically, many of the boats at the club make the superyacht cut of being at least 30 meters, and are more than impressive, they are at the “small” end of the world’s superyacht fleet. Today’s most extraordinary superyachts – and a lot of the average ones – boast features a Bond villain would appreciate. These vessels are also too big by factors of magnitude for the BBC’s berths.
For instance, the $500 million, 533-foot Eclipse, owned by Russian billionaire Roman Abramovich, is completely bullet- and bomb-proof and features a missile defense system, three helicopters and a submarine for a tender that can enter the yacht from below. Or the $323 million, 390-foot A, an explorer superyacht with a bow designed to cut through icebergs and an escape pod – in case things don’t go exactly as planned. And then there is the largest superyacht in the world, the 590.5-foot Azzam, which boasts four water jet engines that allow it to reach speeds of 31.5 knots and is estimated to have cost over $600 million to build.
The point is, these things are over-the-top, totally excessive luxury items for the world’s multimillionaires and billionaires. And that’s exactly what makes them more fascinating to talk about than a bad day on the Trump trail. So, let’s take a voyage through the ego-and-platinum-laced sea that is superyachting.
The Cost of Movable Real Estate
Let’s face it, the minute you see a superyacht, or to use the American term, “megayacht,” the first question you have is, “How much?” (Unless you can afford one. Then it’s, “Is that really big enough?”)
And while the largest, highest-tech superyachts cost hundreds of millions to build, it is possible to join this super-set for less, says Crispin Baynes, a sales rep at Burgess, one of the world’s leading superyacht brokerages, and a man whose crisp English accent and dashing looks fit the 007-superyacht script like a silk-lined Armani glove. Baynes is one of 30 to 40 elite brokers flying around the world to help clients find the perfect symbol of elite wealth. “It’s like selling real estate, only they move around a lot,” he says.
At Burgess, used superyachts range from well under $10 million to more than $90 million, while designing and building your own will cost $1 million a meter and up. But, says Baynes, it’s the ongoing costs of ownership that really must be understood. Fuel, crew salaries, dockage, repairs – the list is long and can make the most stoic accountant cry. In fact, the annual cost to own a superyacht can be from 10 to 15 percent of the value of the yacht. That’s why only ultra-high net worth individuals – those with a net worth of at least $30 million – can afford them. Right now, that’s .003 percent of the world population.
“As a rule of thumb, we say that spending any more than 10 percent of your net worth to own one of these and you’re going to feel the pinch of ownership,” Baynes says.
That pinch can quickly turn to a gaping, bleeding, financially mortal wound for the less-than-ultra wealthy. Take docking your dream. A ballpark average is $6 per foot per day, says Baynes, so even that “midsize” 165-foot superyacht will cost you more than $350,000 per year. Just to sit in the water.
“A good captain is earning around $15,000 a month, and you might have a crew of 12,” says Baynes. That’s about $80,000 per month in salaries, he says – or just under $1 million per year. (It’s worth noting that some of the world’s largest superyachts have crews of 40-plus.)
Then there is fuel: $35,000 to $50,000 to fill her up, which, incidentally, takes three trucks visiting your berth for up to six hours – pulling up to a gas dock is not an option when you are as long as the town. Total annual fuel cost? Likely $300,000. Add in a quarter of a million for insurance and another mil for maintenance and repairs, and your bottom line is approaching $3 million.
This is why, if the decision to buy a superyacht were a rational, financially based one, the world’s fleet of approximately 3,700 power superyachts would be motored out to sea and sunk for the insurance money.
“The only way you can rationalize it is in the privacy and pride. For many of these billionaires who have worked hard to make all this money, this is one of the greatest gifts they can give themselves,” says Baynes. “To have that time away, with just your family and friends in that private space, in the most luxurious of settings, you can’t really put a price on that.”
Well, actually you can. It’s just that 99.997 percent of us can’t pay it.
Chartering the Dream
There is a way to get out of all those fees and costs, of course. Chartering. Or, as mere mortals think of it: the absolute, positively most expensive vacation of your life. Chartering these floating resorts ranges wildly, depending on the size and age of the yacht to the season and location to what toys and amenities it features. A quick check of the Burgess website shows that a weeklong charter can run from about $50,000 for a 97-foot yacht to the stratospheric $850,000 for a nearly 300-foot elite beauty with more toys than Richie Rich.
But let’s consider a relatively new, well-appointed 165-foot superyacht. You might charter that for $220,000 per week, says Baynes. You’ll also pay a 10 percent to 20 percent gratuity to the captain and crew. So, in essence, you can charter for perhaps eight to nine weeks out of the year before hitting the cost of owning the yacht.
On the flip side, an owner could charter out this superyacht for 12 to 14 weeks of the yearand pay for owning it, right? Well, not so much, says Baynes. The math doesn’t really work in reverse.
First, it means you won’t be using your superyacht in peak Med season (Gasp!) or peak Caribbean season (Quelle horreur!). “So if you didn’t mind not using it in the peak season and you wanted to book as much charter as you could to try to break even, then yes, it’s possible,” Baynes says.
But, that’s a lot of usage on a yacht and will create extra maintenance costs and depreciation. Says Baynes: “You have to be very careful in saying you can cover the costs. You can, but you’re not going to keep up with the depreciation and the extra maintenance in working a boat that hard. So I think people have to come into it with their eyes wide open.”
Trends in Superyachts
When it comes to 200 feet of gleaming boat, there are some things buyers and charterers are going to expect, says Baynes. Even if you’re not planning to offer your yacht for charter, resale is important. “It’s not what you can get in for; it’s what you can get out for,” Baynes says.
To that end, he says pools, Jacuzzis and Jet Skis are simply not enough anymore. The well-appointed superyacht will also need a gymnasium and wellness area, a cinema, open-plan interiors that blend the outdoors with the in, many large outdoor decks, and the latest in cool water toys, such as Jetlev-Flyers and hoverboards.
Some things don’t change, however, like the need – or, let’s say, want – for a formal dining room aboard. “They don’t get used that often, but it’s expected that they’re there,” says Baynes.
What today’s more enlightened billionaires are really into, even more than pools on a boat, is boosting their lifestyle portfolio, according to a 70-page report by luxury yacht brokerage Camper & Nicholsons International and Wealth-X, a research and consulting firm that studies the world’s richest and most powerful. And, it argues, superyachting is the answer.
“A lifestyle is a finite resource, based in time. This fact creates pressure to invest one’s time wisely. If you look at yachting in this light, i.e. the return on investment that it provides, it soon becomes clear that it is one of the most sensible investments worth making. Why is this? Upon closer examination one discovers that yachting isn’t just one experience. It is multi-faceted and capable of engaging all the senses, drawing together incomparable experiential luxury activities. Quite simply, investing time in yachting pays off the highest dividends you could imagine,” says the report.
(To which I say: I’m not sure what that means, but as soon as I make my first billion, I am totally in.)
Luxury Meets Adventure
Perhaps it’s this desire to diversify and grow their lifestyle portfolio, perhaps it’s just that finding 200 feet of dock space in Cannes is crazy hard these days, but another trend in superyachts is the explorer yacht. These yachts are designed to go farther, for longer, and take their billionaire owners on adventures in serious style.
No longer are superyachts restricting themselves to the milk run of the western Mediterranean and the Caribbean. A new breed of brash, trendsetting billionaires are daring to venture to the eastern Med and even as far as the Galapagos, Asia and Antarctica. This last stop explains why the number of superyachts with ice-breaking capabilities is on the rise, according to the Wealth-X report.
Baynes says those who want to take off for a couple of years or more often own these yachts. “I know one young family whose helicopter pilot is also their schoolteacher,” he says.
And in the end, perhaps using it every day of the year is the only rational way to own one of these mobile mansions. Because at a running cost of $3 million, that’s still $8,219.18 per day. And that’s without a single drop of champagne.
If the decision to buy a superyacht were a rational, financially based one, the world’s fleet of approximately 3,700 power superyachts would be motored out to sea and sunk for the insurance money.